You Could Retire...But Should You? | Planning Insights

Anne Hussman |

It might be better to wait a bit longer.

Some people retire at their first opportunity, only to wish they had waited longer. Thanks to Wall Street’s long bull run,
many pre‐retirees have seen their savings fully recover from the shock of the 2007‐09 bear market to the point where
they appear to have reached the “magic number.” You may be one of them – but just because you can retire does not
necessarily mean that you should.

Retiring earlier may increase longevity risk. This is the chance of “outliving your money.” Bear markets, sudden medical
expenses, savings shortfalls, and excessive withdrawals from retirement accounts can all contribute to it. The downside
of retiring at 55 or 60 is that you have that many more years of retirement to fund.

Staying employed longer means fewer years of depending on your assets and greater monthly Social Security income. A
retiree who claims Social Security benefits at age 70 will receive monthly payments 76% greater than a retiree who
claims them at age 62.1

There are insurance issues to consider. If you trade the office for the golf course at age 60 or 62, do you really want to
pay for a few years of private health insurance? Can you easily find such a policy? Medicare will not cover you until you
turn 65; in the event of an illness, how would your finances hold up without its availability? While your employer may
give you a year‐and‐a‐half of COBRA coverage upon your exit, that could cost your household more than $1,000 a
month.1,2

How is your cash position? If your early retirement happens to coincide with a severe market downturn or a business or
health crisis, you will need an emergency fund – or at the very least enough liquidity to quickly address such issues.

Does your spouse want to retire later? If so, your desire to retire early might cause some conflicts and impact any shared
retirement dreams you hold. If you have older children or other relatives living with you, how would your decision affect
them?

Working a little longer might be good for your mind and body. Some retirees end up missing the intellectual demands of
the workplace and the socialization with friends and co‐workers. They find no ready equivalent once they end their
careers.

Ideally, you retire with adequate savings and a plan to stay physically and mentally active and socially engaged. Waiting
a bit longer to retire might be good for your wealth and health.

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Citations.
1 ‐ tinyurl.com/o8lf6z2 [8/1/14]
2 ‐ money.usnews.com/money/blogs/on‐retirement/2015/02/05/6‐reasons‐you‐shouldnt‐retire‐early [2/5/15]